Investigation Finds Lax Oversight of Online Education

Five years ago, state auditors blasted the Colorado Department of Education for failing to monitor online public schools that, among other issues, improperly funneled public money to private schools and maintained licensed teacher-to-student ratios of 4 to 1,500.

In a 10-month investigation, Education News Colorado and the I-News Network filed open-records requests, analyzed data, and interviewed district, state and online education officials to examine what has happened to state oversight of online education since that 2006 audit.

What emerged was a pattern of lax oversight for online programs, decisions that favored politically–connected online schools with lobbying muscle, and a failed attempt by lawmakers to fix the system.

Informed of these findings, the former state senator who asked for the 2006 audit lamented that Colorado is back where it started in its attempts to oversee the burgeoning online public school system—which started with 13 students in 1995 and has become big business. This year, online schools in Colorado will receive $100 million in tax dollars to educate some 18,000 students from kindergarten through high school.

Special Investigation:
Colorado's Online Schools

A three-part series from Education News Colorado and the I-News Network.

“When I look at the performance of these schools, and the fact that we have had nobody with expertise in online education at the helm, I fear very little, in practicality, has taken place,” said Sue Windels, the former Democratic state senator who authored a 2007 bill to hold online programs accountable. “I’m just not finding that these programs have been evaluated and asked to measure up to our standards.”

Bob Schaffer, chairman of the State Board of Education, said he believes state oversight of online education has been “about right,” given limited resources. Schaffer, who heads the board’s 4-3 Republican majority, said real oversight comes from parents exercising school choice.

“The core element here that makes online different is that it is completely subject to the marketplace and a superior level of scrutiny—and that is from the parents who care about the individual child more than anyone else,” said the former U.S. congressman who now runs a Fort Collins charter school. “Their judgment cannot just be replaced by a government worker.”

Parents don’t always learn about what happens behind the scenes, though. I-News and EdNews obtained emails, memos and data that had not been previously released publicly. Patterns and incidents revealed in those documents show how attempts to oversee online schools by lawmakers, state education officials and local school boards have failed.

State Orders Rescinded

For example, EdNews and I-News found that the only attempt by state officials to make use of the 2007 law to sanction poorly performing online schools was quashed after a politically-connected school complained to the state Department of Education.

The 2007 law called upon the state education department’s director of online programs to issue letters of corrective action to poor performers. In 2009, then-state online program director Pamela Ice for the first time sent such notices to four schools, including Hope Online—the controversial program that was singled out for criticism in the audit five years ago. Ice said Hope’s program was “below expectations” in 20 of the 25 areas reviewed by the state.

Three days later, Jim Christensen, then-superintendent of Douglas County schools, which authorizes the Hope Online program, fired off a letter to Ice’s boss, then-state education commissioner Dwight Jones, challenging Ice’s findings and asking that the state audit be “embargoed” from the public.

Jones agreed to withhold the audit from the public. Two weeks later, Ice informed Hope and Douglas County that Jones had ordered the March letter rescinded and no corrective plan was necessary, according to state documents. Jones did not respond to a request for comment.

Similar corrective action orders for three other online programs also were rescinded. Ice declined to comment. Christensen said the decision wasn’t political.

“We had just taken over Hope, and what we were asking is time to turn Hope around. The commissioner agreed,” he said. Hope moved its charter from the tiny Vilas school district in southeastern Colorado to Douglas County after the 2006 audit.

This year, when two local school boards each voted against allowing Hope Online to operate learning centers in their districts, the state Board of Education overruled them.

In June, the seven elected board members voted along party lines to overturn unanimous school board decisions in Eaton, near Greeley, and in Harrison District 2, south of Colorado Springs, seeking to stop Hope operations there.

Both districts lost similar battles in 2008; this year’s fights were over Hope’s desire to renew operating agreements in their districts.

“Our community elects our board to make the proper decision,” said Eaton Schools Superintendent Randy Miller. “But in fact, we don’t have any local control. It doesn’t matter.”

Miller said he believes Hope’s political connections and lobbying dollars did matter.

Lobbying and Influence

Like several of the largest online school companies, Hope spends more on lobbyists to influence state lawmakers than districts with far more students. Hope, with 2,900 students, and the Foundation for Academic Innovation, which helps fund Hope, paid $7,624 monthly to the Capstone lobbying firm during the 2011 General Assembly, records show. K12 Inc., with 5,000 students in Colorado, paid $5,700 a month to lobbyists at the firm Colorado Legislative Services.

In contrast, Denver Public Schools, with more than 70,000 students, paid its lobbying firm $2,916 a month.

Hope Online was launched with support from oil and gas developer Alex Cranberg, a prominent Republican donor and vocal advocate for school choice. Cranberg, who recently gave $50,000 to Douglas County’s legal fight for school vouchers, employed Schaffer, the state board chair, to work on education projects and as a vice president of business development from 2002 to 2007.

Hope’s chairman of the board is Phil Fox, former deputy director of the Colorado Association of School Executives. C. Michael Cooke, a former Douglas County Commissioner and head of the Department of Regulatory Agencies under former Gov. Bill Owens, is chief compliance officer. One of Hope’s attorneys was Scott Gessler before he was elected Secretary of State last year.

Hope CEO Heather O’Mara, who has been with Hope since its beginning in 2005, said the school’s high-powered network “demonstrates Hope’s commitment to providing the best that we can with the resources that we have for our students and the focus on academic achievement.”

Harrison Schools Superintendent Mike Miles declined to speculate on political motives for the state board’s decision to require Harrison to continue operating two Hope centers.

“I can tell you that I don’t understand that decision,” he said. “Our motivation is only instructional … It’s not philosophical. Choice is OK. But we want any school that is open in our district to be effective.”

Colorado Springs District 11 even went to court after State Board members overturned its board decision to expel Hope in 2008. Then, just 22 percent of Hope students were proficient in reading and the charter was reimbursing the state nearly $3 million for miscalculating its student count. But a Denver judge said the district lacked standing to seek judicial review of the state board ruling.

Schaffer said his votes had nothing to do with politics or his relationship with Cranberg: “The districts failed to make a compelling argument that throwing those children out of school was in the best interest of the children.”

These revelations come as Colorado is at a crossroads in online education oversight. In May, lawmakers reacting to online schools’ complaints repealed most of the extra online reporting and accountability requirements created after the 2006 audit.

Lawmakers folded online schools into the state’s broader school accountability system. That means any online schools falling short will have five years to fix problems before any sanctions are imposed by the state. The new law largely shifts responsibility for oversight of the online schools to local school districts–much as it was before the failed reforms of five years ago.

But Amy Anderson, the state’s new assistant commissioner of innovation and choice, said the state, by law, still has a role in online oversight and “I take it very seriously.”

“There’s going to be a lot more attention paid to this issue,” she said, “and some more changes made for the better.”

The Julesburg Case

Perhaps nothing since 2006 epitomizes the potential risks of lax oversight better than the case of former online school principal Benjamin Valdez and the tiny Julesburg school district in Colorado’s northeastern corner.

In August, the ousted principal of the online Insight School of Colorado emailed a state lawmaker with a startling allegation: He said his former employer received millions of dollars in public school funding for students it then systematically dropped from its rolls before they were to take annual state exams.

Valdez alleged that Insight pressed for increased enrollment to boost state funding and “paint a stronger financial picture” to potential buyers, then later jettisoned students who might bring down the district’s standardized test scores.

The EdNews/I-News analysis of student data shows the number of potential test-takers at Insight fell dramatically from October, when the student count determines state funding levels, to April, when state tests are given. In October 2010, Insight had 586 students enrolled in the high school grades that take the CSAP tests. But when test time rolled around in March, fewer than half that number took the exams.

Valdez sent the allegation on Aug. 9 in an email to state Sen. Nancy Spence, R-Centennial, who forwarded the email and accompanying documents to state education officials.

But no education officials have contacted Valdez to investigate his allegations that Colorado taxpayers were feeding a national for-profit online school chain at the expense of students across the state, according to Valdez and state officials.

Anderson, who started her job with the state Aug. 29, questioned whether Valdez contacted the Julesburg superintendent or its board members since they contract with Insight.

“I didn’t feel as though they would do anything,” Valdez said. “I went to the state because it’s state money.”

Valdez, who now works for a technical college, said he first emailed state education officials and lawmakers in November with concerns. That first email was anonymous but he said Insight administrators found out about it and fired him, saying he had given away proprietary information because he enclosed documents from the school.

He was terminated after three months at Insight, before it changed corporate ownership twice in the past year.

Insight operates in Colorado under a 10-year contract with Julesburg, though Insight’s administrative offices are in Westminster, more than two hours away. Insight’s newest corporate owner, K12 Inc., operates in 27 states and has projected revenues of more than $500 million for fiscal 2011. A spokesperson for K12 declined comment on the contents of Valdez’s letter. Separately, she said the company had taken steps to improve the school.

The Julesburg school district has fewer than 300 students in its brick-and-mortar schools. But it has 1,500 online students, none of them from Julesburg. The district gets $10 million of its $12 million in state funding for those online students. And its contract with Insight nets it more than $500,000 annually.

“People think we got into it for the money,” said Julesburg school board president Kyle Kline. “It was never intended for the money. It was all for the kids, to try to bring more opportunities to our kids out here.”

Kline said his son is among the Julesburg students who have taken college classes free through Insight—classes such as Mandarin Chinese, anthropology and other electives not usually available in a small ranching and farming community.

Julesburg’s brick-and-mortar schools are rated among the best in the state. But since the state rates districts on the performance of all students, and Julesburg’s online enrollment is triple that of in-building students, the district rating plummeted to one of the state’s worst.

Because of Insight, Julesberg has the state’s second-highest dropout rate and its second-lowest graduation rate among all districts. Insight’s student turnover rate is among the highest in the state—between October 2008 and October 2009, the school recruited 850 new students. By June 2010, nearly two-thirds had left.

Kline said Julesburg school board members have tried to hold the school accountable, though he admits there are limits to what they can do. He dismissed Valdez, the ex-principal making allegations about Insight practices, as “disgruntled.”

“What do you want us to do, go over there and spank them?” an exasperated Kline said of Insight administrators. “The only way we can discipline them is to sever ties with them.”

Julesburg school board members have threatened at least twice to void the contract, he said, particularly after the school’s poor performance on state exams torpedoed the district’s own state rating.

Most recently, Kline said, they’ve told Insight that they must see “a big improvement.”

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